Correlation Between Marriott International and Mondee Holdings

Can any of the company-specific risk be diversified away by investing in both Marriott International and Mondee Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Marriott International and Mondee Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marriott International and Mondee Holdings, you can compare the effects of market volatilities on Marriott International and Mondee Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Marriott International with a short position of Mondee Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Mondee Holdings.

Diversification Opportunities for Marriott International and Mondee Holdings

-0.74

Correlation Coefficient

Marriott International  Mondee Holdings

Pay attention - limited upside

The 3 months correlation between Marriott and Mondee is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Mondee Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondee Holdings and Marriott International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Marriott International are associated (or correlated) with Mondee Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondee Holdings has no effect on the direction of Marriott International i.e., Marriott International and Mondee Holdings go up and down completely randomly.

Pair Corralation between Marriott International and Mondee Holdings

Considering the 90-day investment horizon Marriott International is expected to generate 0.04 times more return on investment than Mondee Holdings. However, Marriott International is 25.18 times less risky than Mondee Holdings. It trades about 0.17 of its potential returns per unit of risk. Mondee Holdings is currently generating about -0.6 per unit of risk. If you would invest  28,082  in Marriott International on September 17, 2024 and sell it today you would earn a total of  963.50  from holding Marriott International or generate 3.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Marriott International  vs.  Mondee Holdings

Marriott International

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Marriott International reported solid returns over the last few months and may actually be approaching a breakup point.

Mondee Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mondee Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Marriott International and Mondee Holdings

The main advantage of trading using opposite Marriott International and Mondee Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Mondee Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mondee Holdings will offset losses from the drop in Mondee Holdings' long position.

The idea behind Marriott International and Mondee Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.